Madame Nouy set to take on Europe's banks

FRANKFURT (Reuters) - The woman set to police Europe's banks has spent much of her 40-year career rising through the ranks of French financial supervision, once a bastion of male domination.

DaniÃ¨le Nouy will become the most powerful woman in European banking when she takes the helm at the industry's new watchdog, the Single Supervisory Mechanism (SSM), due to come into force next November. She will oversee the euro zone's 6,000-odd lenders and will have the power to order a bank closed, if necessary.

"We need a comprehensive integration of financial supervision, in other words more Europe," Nouy said at a conference in May, long before she was put forward for the job.

On Wednesday, she appears before the European parliament to answer questions about how she would approach the post.

A unified system for policing banks across the currency bloc is a key part of Europe's move towards banking union, the most significant attempt at closer European integration since the launch of the euro more than ten years ago. The aim is to win back the investor confidence needed for a return to prosperity.

Nouy has barely a year to build up the new institution under the roof of the European Central Bank (ECB), doing so virtually from scratch. She will have to hire 1,000 staff, develop a manual defining supervisory procedure, and put the largest banks through an in-depth check on their balance sheets to shine light on their risk exposures and capital strength.

She will work with national supervisors, the European Banking Authority (EBA), which writes the rules Nouy and her team will enforce, the EU Commission and the EU Parliament, building bridges to overcome cultural and political differences.

Nouy, 63, will join a growing number of women at the top of the international financial system. In the United States Janet Yellen is set to succeed Ben Bernanke as chairwoman of the Federal Reserve. In Russia, Elvira Nabiullina became the country's central bank governor in June. Christine Lagarde has been head of the International Monetary Fund since 2011.

How tough will Nouy be? Reuters has spoken to people who have worked and are still working with her to find out what makes her tick and how she will tackle the challenge.

RISE TO THE TOP

When the vice president of Germany's Bundesbank, Sabine Lautenschlaeger, was asked in November which qualifications the ideal candidate for the single supervisory chair should have, she set out a demanding list.

Long experience in bank supervision. Understanding of international financial regulation. Practice in international negotiations, at the Basel Committee or the EBA. A strong network among supervisory authorities in Europe, the United States and Asia. And, said Lautenschlaeger, the candidate needs to have stamina, be a team player and be highly intelligent.

It sounded like Nouy's curriculum vitae. Born in Rennes, Brittany, she began her career by joining the Bank of France in 1974, armed with degrees from two of Paris's elite schools. There were hardly any women working in banking or finance at the time.

She started by supervising foreign banks in France, spent a year at the New York branch and eventually worked directly under the head of the French supervisor and his deputy.

"It was terrible for her. It was the breaking point in her professional life," said a former Bank of France co-worker. "In reality it wasn't really fair that she didn't get chosen for this post. She was a natural candidate."

Disappointed at home, Nouy turned to the international stage, moving to Basel to join the Bank for International Settlements, known as the central bank of central banks.

In 1998, she became the secretary general of the Basel Committee, which develops international standards for banking regulation, including minimum capital benchmarks.

In Basel, Nouy fine-tuned her political and diplomatic talent, sharpened her negotiating skills and perfected her expert knowledge by helping to develop the kind of banking regulation that she will have to apply with the SSM.

What impressed those who worked with her most was how quickly she is able to take well-informed decisions.

"She works very hard," said another former colleague. She would be one of the first to arrive in the office and always stayed well beyond nine o'clock and would never demand things of her staff that she was not prepared to do. "If there was a problem in the morning, she would have sorted it out by the evening."